FOREX: USD Softer Again; Trump/Putin Talks Inject Dose of Risk
Aug-07 09:31
- After a bearish close Wednesday, the USD is softer again on the back of a further retracement of the US curve. Risk appetite also saw a boost as headlines confirmed a meeting set between Russian President Putin and US President Trump in the coming days. While the location is yet to be confirmed - the ceasefire demands on Moscow will undoubtedly be a topic of conversation. As a result, the Friday deadline for Russia has presumably been paused - however secondary sanctions on India and other select countries are expected to proceed.
- EUR/USD edged higher still early Thursday, further clearing the post-NFP high in the process. This keeps the recovery off the late July pullback low intact, and works against the bearish backdrop. The break of firm resistance into 1.1607, the 20-day EMA, is signaling greater odds of a further reversal higher.
- The BoE rate decision takes focus going forward, with GBP/USD again resilient. In particular, the vote split among the MPC will be of interest. Markets expect the committee to opt for a 25bps rate cut today, split down the lines of 2-5-2 (50bps cut, 25bps cut, unch) as the modal consensus. We flag that the baseline projections may become less useful as a communication tool going forward - and as such, less market relevant. EUR/GBP remains in a nascent uptrend, evident in the recovery from last Thursday's low. Key resistance and the bull trigger remains at 0.8769, the Jul 27 high.
- Focus elsewhere Thursday is on US weekly jobless claims and unit labor costs. Fed's Bostic is also due to be addressing monetary policy shortly after the BoE rate decision, while POTUS Trump is set to make remarks after the cash equity close.
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US TSY OPTIONS: FVQ5 108.00 Puts Sold
Jul-08 09:25
FVQ5 108.00 puts 20K given at 0-15.
FOREX: Tariff Letter Frenzy Caps USD/JPY Rally
Jul-08 09:23
- Trump's tariff letter-writing caught markets yesterday, prompting losses for equities and a negative close on Wall Street. Equity futures are yet to reverse, but are off the worst levels of the week headed into the crossover. The tariff headlines yesterday put paid to the USD/JPY rally that seems to have run out of steam into NY hours. That said, price remains in close proximity to 146.45, the weekly high and level above which the corrective move higher could resume. Through here, markets eye 148.03 for direction ahead of the Y149.73 200-dma.
- Triggers for a return higher in USD/JPY would be a re-widening of front-end US-Japan yield spreads or a corrective rally for the USD Index - which appears to be building a base at the recent pullback low of 96.377. While tariff uncertainties remain present, another likely delay to the installation of reciprocal tariffs to early August is keeping the USD downside argument intact, despite further warning signs over the pace of USD weakness this year - most recently via a PBOC survey issued to domestic banks earlier in the week.
- JPY is the poorest performer on the day, while AUD is the strongest. The RBA rate decision pushed back against building consensus for another rate cut by holding policy. AUD/USD trades back above 0.6500 as a result, and keeps the 50-dma support intact on any further downside.
- Following the data rush last week, there are no tier 1 releases due from the US Tuesday, although the NY Fed's latest survey on one-year inflation expectations could see some attention, expected to slow to 3.13% from 3.20%. The speaker schedule is similarly light, with just ECB's Nagel at 1500BST/1000ET.
JPY: The Exchange traded put Option is still trading
Jul-08 09:20
Early FX Exchange traded Option, New Position, looking for Yen strength, still trading in a few clips.
While there's more of a two way flow, the aggressor has been the seller all Morning.
- JPYUSD (8th Aug) 63.00p, sold at 0.25 in ~3.9k total now.
